Why on earth should the CIO embrace the cloud?

10 Nov 2010

If CIOs insist on remaining in control of internal applications and spending their time worrying about infrastructure issues, they will quickly become irrelevant.

When an organisation deploys cloud computing, there are certain things its leaders expect to happen. They will sign a contract. They will need to define governance, security and service level agreements. They may need to adapt existing business processes in order to embrace new applications and news ways of working. What they might not anticipate is how cloud computing will change the role played by the company’s CIO and the culture of the whole IT organisation.

“I think the cultural impact of cloud computing has been completely overlooked,” says Toby Redshaw, CIO of insurance giant Aviva. “And unless they wake up, a lot of CIOs are going to find themselves much less important and interesting in the future.”

Aviva currently uses more than 20 cloud applications, including Microsoft SharePoint for collaboration and Workday for HR processes. The biggest shift, Redshaw says, has been the speed with which IT can now operate.

The company recently rolled out SharePoint globally in just 142 days.

“Crushing cycle times means you approach IT differently,” he says. “Rather than being the person who builds and manages the stack, you’re the person who can spend time doing things the business cares about.”

If CIOs insist on remaining in control of internal applications and spending their time worrying about infrastructure issues, they will quickly become irrelevant, Redshaw believes.

“Some will see this as a threat, and a reduction in their influence, but I think that’s a mistake,” he says. “It’s an opportunity to deliver real financial impact, to help the business better manage the investment portfolio. For me, that’s what the CIO should have been doing all along.”

In fact, the CIO may have more, not less, to do once cloud is in the picture, argues David Bradshaw, a research manager with IT market research company IDC. Unlike outsourcing, where companies can hand a full department over to a service provider, cloud computing is still quite granular, he says.

“This means you have a lot of work to do around integration, and you also have to get to grips with a whole new approach to service acquisition.”

That’s certainly been the experience for Adam Gerrard, CIO of car hire firm Avis Europe.

“A lot of cloud vendors want to sell directly to the business, but until someone offers end-to-end functionality, there will always be a need for IT input, simply to work out how these applications should all be talking to each other,” he says.

“As a CIO, this means you need to have that technical knowledge, but you also need to understand how to evaluate suppliers and how to help the business understand the benefits of cloud, but also the business risk that they might be exposed to.”

An opportunity to shine

Rather than feeling sidelined, smart IT executives see cloud computing as a massive opportunity, says Dominic Shine, chief technology officer with events company Reed Exhibitions.

“I think it’s a mistake to see cloud as a threat, because you definitely still need a CIO in a cloud environment,” he says. “While services may become utilities, they’re a long way from being something you plug in and forget about. Cloud is a sophisticated toolset that requires careful thought about how you manage and adapt existing processes, how to continue to coach the business to keep it moving forward, and there are significant integration challenges.”

Rather than viewing cloud as ceding control or influence, Shine sees the new model as an opportunity to be more innovative.

“You have to become comfortable with a faster pace of doing business, because you can now implement major innovations in a much shorter period of time, as can your competition,” he says.

Over the next decade, CIOs will have to become more innovative and agile, agrees Paul Caris, CIO of law firm Eversheds. The interesting thing about cloud, says Caris, is that it wipes out the natural advantage that companies with large IT shops have traditionally had over smaller, newer businesses.

“Now you’re in a world where the guy down the road can have exactly the same functionality as you, within a few weeks, and on a pay-as-you-go model, so they don’t have to manage that infrastructure, in the way you’ve been doing.”

In this environment, the CIO plays a crucial role of monitoring and constantly evaluating new products and opportunities and how they might be competitive threats to a business, says Caris.

“You have to be more commercially aware than ever before, and your focus is outside the business, which is new,” he says. “A successful CIO is one who understands commerce, who knows how to move quickly, and who has the technical and financial understanding to do due diligence effectively on these very new, very niche suppliers.”

It isn’t just the CIO’s own skills that need to evolve in a cloud environment, of course. One of the biggest challenges they will face is transitioning the skills and composition of their in-house teams, according to Andrew Newton, head of IT with construction company Keepmoat.

Although the company has only recently begun to explore cloud services with Star Internet and MessageLabs for email and security applications, Newton can see the company expanding its cloud infrastructure rapidly, particularly within a private cloud environment.

“What’s going to be a major challenge is ensuring we retain good people, but also develop the skills we need for that environment,” says Newton. “We need good integration skills but also the commercial skills, balanced with a smaller development team.”

Ultimately, a successful CIO in the cloud world is one that can let go of their controlling tendencies, says Bradshaw.

“You can’t continue worrying about features and functions, because that’s not where competitive advantage lies any more,” he says. “Instead, the CIO must balance the loss of control and the inability to customise every feature on one hand, with the ability to become more agile, more competitive and more cost effective on the other. That’s a pretty big adjustment.”

For further information on cloud computing visit EMC Ireland online or ring 01 8111700.

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